E-Invoicing in Latin America

E-Invoicing in Latin America

Ensuring Compliance and Alignment with Corporate Strategies

e-Invoicing Partner and Speaker

 Co-founded TrustWeaver, provider of innovative SaaS service IT compliance solutions servicing many of the world’s largest

corporations, in 2001.

 2000 World Economic Forum (WEF) Global Leader for Tomorrow.

 15+ years served as member in a number of European Commission expert and working groups, including the CEN E-Invoicing Workshop

 Author of the 2001 Asia-Europe Meeting (ASEM) E-Commerce Principles and co-author of Alliance for Global Business 1998 Global Action Plan for Electronic Commerce for OECD Ministerial in Ottawa.

 Co-chairs the ICC Digital Economy Commission’s Task Force on Security and Authentication

 Member, Supervisory Board of the .nl domain registry foundation (SIDN)

 Member, Exec Committee European E-Invoicing Service Providers’ Association (EESPA) and Chair of EESPA Public Policy Working Group

 Vice Chairman of EDIFICE, the European network for B2B integration in high tech industries

 Co-founder and Board member, Digital Trust and Compliance Europe (DTCE)

Christiaan van der Valk President & Co-Founder TrustWeaver

Agenda



Current Status Invoicing/E-invoicing



Law Enforcement and Audit Options



Regional & LATAM Specific Regulations



Global Efficiencies vs Local Compliance

Why the invoice?

• ”Self-assessment tax » • Company as a tax

collector

• Invoice is the key transaction evidence

Law Enforcement and Audit Options Worldwide

prepare

process

archive

« ex ante » contract-based relationship e.g. Netherlands, Australia « clearance » real-time controls e.g. BRICS, LATAM « ex post » audit years later

Global Evolution

Global Evolution

Two Critical Success Factors

CLEARANCE MANDATES

Generally very quick results

 Up to 90% adoption

 Less fraud and corruption

 Real-time economic data

 Targeted tax enforcement Local trust base

 Invoice finance (e.g. factoring)

Mandate Mania

Mexico

Brazil

Ecuador

Chile

Uruguay

Argentina

Mandates are for Real



Technology-driven requirements

−

Compliance/non-compliance =

binary

yes/no proposition



Non-compliance easily equated with

tax evasion:

−

Administrative penalties

e.g. 150% of

the value of the supply (Brazil).

−

Imprisonment

of repeat offender

executives

Global Evolution

Global Evolution

Global Evolution

Global Evolution

Basic Clearance Features & Functions

State or State Agent

Supplier Buyer 1. OK TO ISSUE? 2. CLEARED FOR ISSUANCE 3. ISSUE INVOICE TO BUYER 4. VALIDATE CLEARANCE 5. CONFIRM CLEARANCE

Some Advanced Features

State or State Agent

Supplier Buyer

ACKNOWLEDGE/REJE CT

CANCEL

Clearance Model Differences and Commonalities

Mexico Brazil Turkey Russia

Digital signature (on invoice or summary) Mandatory XML format State (not State Agent)

clearance

PAC EDO

Delivery of tax invoice to buyer through clearance mechanism Full cycle clearance (buyer acknowledgement/ rejection)

Brazil

 3rd _{LATAM country to allow e-invoicing.}

 Since 2005, driven by the Brazilian Tax Authority “SEFAZ” (Secretaría de Fazenda).

 Mandatory XML format with more than 400 fields.

 Digital signatures based on certificates from authorized CAs.

 Clearance for goods, transport and services invoices on State and municipality (“Prefeituras”) levels.

 Graphic representations possible, e.g. in PDF with an “access Key (NFe key)” generated based on certain XML fields.

Goods e-Invoicing Brazil (NFe)

7

Supplier Buyer

Supplier sends XML file with tax information

Government responds with "authorization of use”

1

2

Local state Tax Authority submits to federal Tax

Authority database

3

DANFE which facilitates verification of NF-e by

inspection stations

4

Transportation carrier may also need the DACTE Electronic Waybill or a MDFE

(several CTE grouped) 5 Suppliers sends NF-e or CT-e 6 Buyer must validate authenticity with National Tax Authority 8 In case of any adjustment related to the goods (quantity, quality, etc.) the buyer can create a MDE.

9

Goods delivered to buyer with DANFE, DACTE

Services e-Invoicing Brazil (NFS-e)

Supplier

Local Tax Authority Prefeitura 1 Supplier sends RPS file with tax informatio n Prefeitura responds with a NFs with an authorization code. 1 2 Suppliers sends NF-s in a PDF Format 3 Buyer

Local Tax Authority Prefeitura 2 Some Prefeituras send the NF-s to

the buyers Prefeitura for validation.

In some cases the Buyer can check the NF-s info in his

local Prefeitura.

4

México

 2nd _{LATAM country to allow e-invoicing.}

 Since 2005, driven by the Mexican Tax Authority “SAT” (Servicio de Administración Tributaria).

 Mandatory XML format.

 Mandatory electronic signatures based on SAT-issued certificates.

 Clearance for goods, services, transportation and soon payslips (mandate before April 2014).

 Certified operators (PACs) perform clearance for SAT.

 Graphic representations, for example in PDF format, possible, but always with QR code with the “original chain”.  CFD zone “Adenda” allows adding key business data.

 Mandatory since 2010.

e-Invoicing in Mexico (CFDi)

Supplier

Authorized PAC

National Tax _Buyer

1

Supplier sends XML file with tax information, and complements (different types of taxes).

A copy of the signed XMLs are sent to the National Tax Authority

The Authorized PAC validates the signed XML and adds invoice number and PAC digital signature

("timbrado"). ₂ 3 Printed CFDi which facilitates verification of goods by Federal Police 4 Usually once the payment is issued, they sent the electronic CFDi 5 6 The buyer can

review one by one each CFDi in the Tax

Authority Platform. The buyer can connect to a Authorized PAC to validate via WS a batch of received

Chile

 First LATAM country to allow e-invoicing.

 Since 2002, driven by the Chilean Tax Authority “SII” (Servicio de Impuestos Internos).

 Mandatory XML format.

 Digital signatures based on certificates from authorized CAs.

 Clearance through tax administration platform.

 Graphic invoice representations possible, for example in PDF format, with PDF417 bar code.

 5 years mandatory archiving.

 Mandate for large companies by Oct 2014 – SMEs to be gradually integrated until 2017.

Argentina

 Since 2006, driven by the Argentina’s Tax Authority “AFIP” (Administración Federal de Ingresos Públicos).

 No mandatory invoice format.

 Taxable persons authenticate to an AFIP online service with a compliant certificate to get a “CAE” (Código de Autorizaación de Emisión) that needs to be inserted in the electronic invoice.

 No clearance.

 Invoice types; “A” normal B2B, “B” invoices issues to tax exempt entities, consumers or work under simplified regime, “C” issued by tax exempt entities or work under simplified regime, “E” for export, “M” for retention cases etc.

B2B Strategy Tension

GLOBAL EFFICIENCIES

OR LOCAL

COMPLIANCE?

× Speed of mandate rollout favours local software

adoption

× Local fragmentation: per-country integration and maintenance

× Security concerns as smaller subsidiaries lack resources to run enterprise software

The Best of Both Worlds

Frequently Asked

Questions

How does TrustWeaver partner with OpenText/GXS to

support the new regulatory/compliance requirements in

LATAM countries, including Brazil?

Digital Signature and Security Archiving and

Audit VAT Compliance

 Secure electronic data warehouse for all invoice-related documents

 Transaction audit trail  Management

information for buyers and suppliers

 Non-Signed EDI for

 Invoice complies with country-specific tax authorities

 Backed by team of

analysts and accounting specialists

 Digital signature per country rules

 Guarantees identity of sender

 Signed digital image or data file

OpenText/GXS & TrustWeaver:

Fully Managed Service



Security & key

management



Performance



Multi-country



MX



BR



CH



AR



…



+50 worldwide



Compliance

maintenance

Local Compliance Partner

--- TrustWeaver Тах Authority State Agent Тах Authority State Agent

What are the key considerations for organizations that

need to set up a cost effective e-invoicing process?



Single global e-invoicing

solution



Interoperability



De-couple compliance

from business processes



Address legal evolution



Requires an

understanding of legal

areas other than VAT

Case Studies and Additional

Resources on e-Invoicing

Case Studies

 This company manufactures its

broad range of food, drink and confectionery products across 450 locations and distributes across 86 countries. Each region had a different e-Invoicing solution in place and they decided to consolidate on to one platform

 OpenText|GXS Active Invoice with

Compliance was chosen as the preferred solution to allow 550 suppliers to be able to send invoices electronically by predefined web forms.

 This company is now able to meet

numerous invoice compliance regulations including Bulgaria where the AIC platform has been recently rolled out.

CPG Manufacturer

E-invoicing in EMEA

 This company is a global supplier of interior systems to the automotive industry with 260 manufacturing locations around the world. Many of their customers including Ford and GM have established new plants in Mexico, one of the world’s fastest growing automotive hubs.

 OpenText|GXS Active Invoice with

Compliance was chosen as the preferred solution to allow this company to adhere to the specific e-Invoicing regulations in Mexico.

 OpenText|GXS has also been

chosen as the preferred e-Invoicing provider to support their other manufacturing locations around the world.

Automotive Supplier

E-invoicing in Mexico

 This company is one of the world’s

largest manufacturers of tyres supporting customers in multiple industries. They support their customers on a truly global basis and have 69 production locations in 18 countries.

 OpenText|GXS Active Invoice with

Compliance was chosen as the preferred solution to help distribute tax compliant invoices to their customers in France. Longer term they will expand the solution to nine other countries and they will also be able to receive tax compliant e-invoices from their suppliers.

 This company is now able to work

towards their corporate initiative of eliminating paper and reducing their current 18% invoice error rate.

Tyre Manufacturer

Additional Resources on e-Invoicing

Thank you!

www.opentext.com